Slide 9.

CHAPTER 9
CUSTOMER RELATIONSHIP
MANAGEMENT

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.2

Learning outcomes
 Outline different methods of acquiring customers via
electronic media
 Evaluate different buyer behaviour amongst online
customers
 Describe techniques for retaining customers and
cross-and up-selling using new media.

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.3

Management issues
 What is the balance between online and offline
investment for customer acquisition?
 What technologies can be used to build and maintain
the online relationship?
 How do we deliver superior service quality to build
and maintain relationships?

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.4

What is CRM?
 An approach to building and sustaining long-term business with
customers
 CRM comprises of four marketing activities:
 Customer selection
 Customer acquisition
 Customer retention
 Customer extension

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.1 The four classic marketing activities of customer relationship management
Slide 9.6

Marketing applications of CRM

A CRM system supports the following marketing applications:

 Sales force automation (SFA). Sales representatives are supported in their account
management through tools to arrange and record customer visits.
 Customer service management. Representatives in contact centres respond to
customer requests for information by using an intranet to access databases containing
information on the customer, products and previous queries.
 Managing the sales process. This can be achieved through e-commerce sites, or in a
B2B context by supporting sales representatives by recording the sales process
(SFA).
 Campaign management. Managing ad, direct mail, e-mail and other campaigns.
 Analysis. Through technologies such as data warehouses and approaches such as data
mining, which are explained later in the chapter, customers’ characteristics, their
purchase behaviour and campaigns can be analysed in order to optimize the
marketing mix.

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.7

E-CRM – a definition
E-CRM is:

 Applying –
Internet and other digital technology…
(web, e-mail, wireless, iTV, databases)

 To –
acquire and retain customers
(through a multi-channel buying process
and customer lifecycle)

 By –
Improving customer knowledge, targeting,
service delivery and satisfaction.

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.8

Benefits of e-CRM
 Targeting more cost-effectively
 Achieve mass customization of the marketing
messages
 Increase depth, breadth and nature of relationship
 A learning relationship can be achieved
 Lower cost

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.9

Permission marketing
 Customers agree to be involved in an
organization’s marketing activities, usually as a
result of an incentive
 Godin (1999) suggests that dating the customer
involves:
 Offering the prospect an incentive
 Using the attention to teach
 Reinforce the incentive
 Offer additional incentive

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.2 A summary of an effective process of online relationship building
Slide 9.11

Conversion Marketing
 Using marketing communications to maximize
conversion of potential customers to actual
customers and existing customers to repeat
customers
 Agrawal et al. (2001) scorecard:
 Attraction
 Conversion
 Retention

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.3 Multi-channel conversion model
Slide 9.13

The Online Buying Process

 Five different types of web users
 Directed information-seekers
 Undirected information seekers
 Directed buyers
 Bargain hunters
 Entertainment seekers

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.14

Differences between B2B and B2C

buyers
 Market structure
 Nature of the buying unit
 Type of purchase
 Services: low-volume, high-value
 Stationary: high-volume, low-value

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.4 Online and offline communications techniques for e-commerce
Slide 9.16

Marketing Communications for

Customer Acquisitions
 From push to pull
 From monologue to dialogue
 From one-to-many to one-to-some
 From one-to-many to many-to-many
 From ‘lean-back’ to ‘lean-forward’
 The medium changes
 Increase in communication intermediaries
 Integration remains important

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
 Variation in UK media consumption in hours (bars) compared to
Figure 9.5
percentage media expenditure (squares)
Source: Compiled from EIAA (2005) and IAB (2005)
 Measures used for setting campaign objectives or assessing campaign
Figure 9.6
success increasing in sophistication from bottom to top
Slide 9.19

Assessing marketing communication

effectiveness
 0 Volume or number of visitors
 1 Quality or conversion rates to action
 2 Cost (cost per click)
 3 Cost (cost per action or acquisition)
 4 Return on investment
 5 Branding metrics
 6 Lifetime-value-based ROI

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.7 An example of effectiveness measures for an online ad campaign
 Percentage who consider the different information sources as important
Figure 9.8
when researching/considering a product or service
Source: BrandNewWorld: AOL UK/Anne Molen (Cranfield School of Management)/Henley Centre, 2004
Slide 9.22

Online marketing communications

1. Search-engine marketing (SEM)
• Search-engine optimization
• Frequency of occurrence in body copy
• Number of inbound links
• Title HTML tag
• Meta-tag
• Paid search marketing
2. Online PR
• Communicating with media online
• Link building
• Blogs, podcasting and RSS
• Managing brand on third-party sides

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.23

Google Alert

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.9 Search engine results page showing the two main methods for achieving
visibility
Source: Screenshot reprinted by permission of Google, Inc
Figure 9.10 The affiliate marketing model
(note that the tracking software and fee payment may be managed through an independent affiliate network manager)
Slide 9.26

Online marketing communications

3. Online partnerships
• Affiliate marketing
• Online sponsorship
4. Interactive advertising
5. E-mail marketing
6. Viral marketing

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.11 E-mail response figures
Source: Epsilon Interactive
Figure 9.12 Schematic of the relationship between satisfaction and loyalty
Source: Adapted and reprinted by permission of Harvard Business Review from graph on p. 167 from ‘Putting the service-profit chain to work,’ by Heskett, J., Jones, T., Loveman, G.,
Sasser, W. and Schlesinger, E., in Harvard Business Review, March–April 1994. Copyright © 1994 by the Harvard Business School Publishing Corporation, all rights reserved
Slide 9.29

Customer retention management

 Has two distinct goals
 To retain customers of the organization
 To keep customers using the online channel

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.30

Personalization
 Creating personalization
 Extranets
 Opt-in e-mail

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.31

Online Communities
 A customer-to-customer interaction delivered via e-
mail groups, web-based discussion forums or chat
 Choices of developing community for B2C
 Purpose
 Position
 Interest
 Profession

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
 Relationship between loyalty drivers and measures to assess their success
Table 9.4
at Dell Computer
Source: Reprinted by permission of Harvard Business Review from information on pp. 105–13 from ‘Your secret weapon on the web’, by Reicheld, F. and Schefter, P., in Harvard
Business Review, July–August 2000. Copyright © 2000 by the Harvard Business School Publishing Corporation, all rights reserved
Figure 9.13 Activity segmentation of a site requiring registration
Slide 9.34

Lifetime value modeling

 Lifetime value analysis enables marketers:
 Plan and measure investment
 Identify and compare critical target segments
 Measure the effectiveness
 Establish the true value
 Make decisions about products and offers
 Make decisions about the value of e-CRM

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.14 Different representations of lifetime value calculation
Figure 9.15 An example of an LTV-based segmentation plan
Slide 9.37

Customer extension
 Deepening the relationship with the customer
through increased interaction and product
transactions

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.38

Advanced online segmentation

 Identify customer lifecycle groups
 Identify customer profile characteristics
 Identify behavior in response and purchase
 Identify multi-channel behavior
 Tone and style preference

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.16 Customer lifecycle segmentation
Figure 9.17 RFM analysis
Slide 9.41

Types of CRM applications

 Ideal CRM system will support multi-channel
communications or the customer preferred channel

Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.18 An overview of the components of CRM technologies